Future of virtual currency in Indian context

With the invent of Internet and the digital world, one of the most important part of society i.e. exchange through currency is also transforming from physical to digital. Online payment and settlement systems are bringing in major change in the ‘transaction methodologies’ of the world and India is no exception.

India is looking at new world of initiatives from the government. With the introduction of the digital currency in the world, the methodology and challenges of the transactions are changing. This paper tries to look at the current scenario about the digital/virtual currencies like “Bitcoin”, ‘Linden $s’ and other similar systems to see the future of digital transactions with its efficiency and effectiveness. The financial institutes are looking at digital/virtual options for the transactions. Objective of this paper is to find out the acceptance, efficiency and effectiveness of virtual currency and its reliability from audit and auditability perspective.

The methodology used for this research is exploratory and descriptive. As the use of virtual currency in India is comparatively new, it needs to be explored from ‘inclusive finance’ perspectives.

The research focuses on finding out the current status and explaining how in Indian context the use of virtual currency (like bitcoin which is unregulated and not redeemable for its value in gold or any other such commodity) is still to go long way for acceptance because of unawareness/trustworthiness of such currency. The research also shows that the fear of using virtual currency because of unreliability and no acceptance by financial institutes is one of the major hurdles in acceptance of the virtual currency though it is preferred from the financial institutesperspective. The traditional mindset of personal connect is also affecting the acceptance of such currency. The auditability of such currency transaction is yet at questionable stage even RBI (Reserve Bank of India) accepts the strengths of ‘Bitcoin’ type of currency.